If a firm's fixed costs increase, then profits drop but its output should not change.

Name: If a firm's fixed costs increase, then profits drop but its output should not change.
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Question

Quizplus · Accepted Answer

Fixed costs are costs that remain constant regardless of the level of output produced. If fixed costs increase, the total cost of production increases, which reduces profits. However, since fixed costs do not change with changes in output, the firm's output should not be affected.

If a Firm's Fixed Costs Increase, Then Profits Drop but Its